At the beginning of this week, we could see how unpredictable the greenback reacts to economic indicators. Amid upbeat data on the US labor market and business activity, the greenback posted its biggest one-day drop in two months.

However, it would be more logical for the Fed to strengthen the national currency in such an environment. The stability of the US economy allows the regulator to keep interest rates at a high level for a longer period of time. Meanwhile, analysts explained the US dollar's slump by the reduction of long positions in the forex market.

How will the greenback behave today? If inflation data shows a strong figure, the US currency may move into the green and reach last week's 6-month high. Meanwhile, the US dollar index is moving within a weekly trading range of 104.5-104.8.

On Wednesday, the US dollar index traded near 104.7, maintaining its bullish momentum. The recent hawkish comments from Fed policymakers supported the greenback and prevented it from falling below the crucial level of 104.

The dollar/yen pair is also affected by comments from financial officials. After yesterday's bullish comments from the head of the Bank of Japan, the yen has retreated against the US dollar.

The pair's largest single-day gain in two months came on Monday. At the time, markets took Kazuo Ueda's comments about a possible early exit from the negative interest rate policy as hawkish, but the initial effect has faded as the days have passed.

In fact, Kazuo Ueda did not promise anything concrete. As a result, the yen was among the losers today, falling to 147.3 against the greenback.

The dollar/yen pair rose for the second day in a row, reaching a weekly high in the range of 147.0-147.5. Although technical indicators are firmly bullish, fears of intervention may protect the Japanese currency from a large sell-off, especially ahead of the important US consumer price index report.

For the Australian Dollar, the anticipation of key reports from the US and China today turned into a decline within the daily range of 0.6399-0.6434. Against the backdrop of the US dollar's potential strength, Australia is becoming increasingly concerned about weak data from its major trading partner this week.

On Friday, China will release reports on retail sales, industrial production, and unemployment. Judging by the aussie's drop to 0.6410, market sentiment is not optimistic.

As a rule, the New Zealand dollar usually follows the aussie's steps. However, at the beginning of Wednesday, the kiwi broke this rule. Instead of following the Australian currency's decline, it increased against the US dollar.

The New Zealand currency received a boost from domestic data. Today's domestic food price index suddenly rose to 1% from -0.5 in July to 0.5 in August. This gave the kiwi hope for a rate hike, and it began to strengthen in the range of 0.5886-0.5915.

However, there are still a few weeks until the Reserve Bank of New Zealand's meeting on October 4th, and the country's currency can change directions many times. The kiwi closed today's Asian session with green figures near 0.5905.

Yesterday's inflation data was bearish for the Indian rupee. Reports showed that the consumer price index fell to 6.8% year-over-year. On the other hand, the Reserve Bank of India intervened in the last half hour of regular over-the-counter trading yesterday.

This supported the rupee. As a result, the rupee managed to stop a four-day losing streak against the US dollar. After rebounding from a weekly low of 82.8 during the Asian session on Wednesday, the pair rose to around 82.9. Against the euro, the rupee has been trading lower in the range of 88.9-89.1 since the beginning of the week.


00:00 Intro
00:30 Stock exchange trading in Asia
01:36 The US dollar
02:10 USDX
03:32 Kazuo Ueda
04:07 USD/JPY
04:48 AUD/USD
05:35 NZD/USD
06:35 USD/INR

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